1. Field of the Invention
The present invention relates to systems and methods for administering a money laundering prevention program.
2. Description of the Related Art
Certain financial institutions are subject to various rules and regulations relating to anti-money laundering and fraud detection and prevention, including, by way of example, the USA Patriot Act (the “Patriot Act”) and laws administered by the U.S. Treasury's Office of Foreign Assets Control (“OFAC”). These rules and regulations influence the research financial institutions undertake in approving prospective new customer accounts and managing existing customer accounts.
For example, OFAC administers a series of laws that impose economic sanctions against hostile targets to further U.S. foreign policy and national security objectives. Violation of the sanctions is a criminal offense and can result in corporate and personal liability. The regulations apply to American citizens and permanent resident aliens where ever they are located; individuals and entities located in the US; corporations organized under U.S. law (including foreign branches); and entities owned or controlled by any of these (including foreign-organized subsidiaries of U.S. corporations).
By way of further example, pursuant to Section 311, U.S. Treasury Special Measures (“USSM”), certain financial institutions are required to conduct enhanced due diligence to guard against money laundering and report any suspicious transactions where a customer is based in or operating out of a foreign country that has been designated by the Secretary of the Treasury as warranting special measures due to money laundering concerns. Upon designating a jurisdiction, financial institution, series of transactions or type of account as of primary money laundering concern, the U.S. Treasury can then impose one or more special measures delineated in section 311 (i.e., v) prohibiting a domestic financial institution or agency from opening or maintaining in the United States a correspondent account or payable-through account for or on behalf of a foreign financial institution if the account involves the designee).
Section 311, U.S. Treasury Primary Money Laundering Concern (“USMLC”) provides that certain financial institutions are required to conduct enhanced due diligence to guard against money laundering and report any suspicious transactions where a customer is based in or operating out of a foreign country that has been designated “as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization of which the U.S. is a member.” Upon designating a jurisdiction, financial institution, series of transactions or type of account as of primary money laundering concern, the U.S. Treasury can then impose one or more special measures delineated in section 311 (i.e., i) keeping records and filing reports on particular transactions, including the identities of the participants in the transactions and the beneficial owners of the funds involved; ii) obtaining information on the beneficial ownership of any account opened or maintained in the United States by a foreign person or a foreign person's representative; iii) identifying and obtaining information about customers permitted to use, or whose transactions are routed through, a foreign bank's payable-through account; or iv) identifying and obtaining information about customers permitted to use, or whose transactions are routed through, a foreign bank's correspondent account).
There exists a vast amount of publicly-available information that may be considered by a financial institution in connection with determining whether a prospective new customer account, or an existing customer account, poses a risk of potentially conducting illicit activities at the financial institution or through accounts held at the financial institution. For example, the Financial Action Task Force (“FATF”) designates certain countries and territories—Non-Cooperative Countries and Territories (“NCCTs”)—as non-cooperative with international anti-money laundering principles or procedures. The Corruption Perceptions Index (“CPI”) ranks countries in terms of the degree to which corruption is perceived to exist among public officials and politicians, as viewed by business people, academics, and risk analysts. The Bureau for International Narcotics and Law Enforcement Affairs releases an International Narcotics Control Strategy Report (“INCSR”), which reports on a variety of issues including whether a jurisdiction has criminalized money laundering with regard to narcotics; has criminalized money laundering beyond narcotics; mandates reporting of suspicious transactions; maintains a financial intelligence unit; cooperates with international law enforcement; allows non-bank financial institutions; criminalizes financing of terrorism; allows for international transportation of currency; requires recordation of large financial transactions; maintains various records; maintains a system for identifying/forfeiting assets; provides arrangements for asset sharing; and provides for a disclosure protection safe harbor. INCSR also categorizes jurisdictions by level of money laundering concern (i.e., primary concern, concern, monitored, unlisted). IntelliMetrix, a subscription-based service, publishes information regarding the extent to which a country has problems with crime, civil disturbance and terrorism.
Other publicly-available information includes whether a country is a member of various money laundering prevention organizations (such as FATF, APG, CFATF, MONEYVAL, ESAAMLG, GAFISUD) or other international organizations (Commonwealth Secretariat, Asia Development Bank, African Development Bank Group, Inter-American Development Bank, International Association of Insurance Supervisors, Organization of American States, World Customs Organization, Interpol, or the European Union); allows “offshore banks” to be formed; allows shell companies or shell banks; provides for International Business Companies or other similar vehicles that are generally exempt from certain requirements that would assist in fostering secrecy; allows for the issuance of bearer shares; sells economic citizenship; or permits internet gaming.
There is a need for a systematic method of using publicly-available information in connection with the administration of a money laundering prevention program, to assist a financial institution in complying with the fraud detection and prevention and anti-money laundering laws.